SeeThruEquity Initiates Coverage on Nephros, Inc. (OTCBB: NEPH) with Price Target of $1.65

NEW YORK, NY / ACCESSWIRE / June 4, 2015 / SeeThruEquity, a leading independent equity research and corporate access firm focused on smallcap and microcap public companies, today announced it has initiated coverage of Nephros, Inc. (OTCQB: NEPH) with Price Target of $1.65.

The report is available here: NEPH Initiation Report. SeeThruEquity is an approved equity research contributor on Thomson First Call, Capital IQ, FactSet, and Zack’s. The report will be available on these platforms. We also contribute our estimates to Thomson Estimates, the leading estimates platform on Wall Street.

“Nephros has developed an advanced high performance line of filters, called ultrafilters, which are primarily used in dialysis centers for the removal of biological contaminants from water, bicarbonate concentrate and/or blood. Nephros has engaged major distributors to capitalize on its FDA-cleared ultrafilters for applications in both hospitals and dialysis centers,” stated Ajay Tandon, CEO of SeeThruEquity. “The ultrafilters offer durability and performance advantages versus conventional microfilters, and Nephros believes that the market opportunity for US hospitals alone is over $400mn. We are initiating coverage with a 12-month price target of $1.65 per share.”

Based in River Edge, NJ, Nephros is a commercial stage medical device company with two core product lines: 1) the Hemodiafiltration (HDF) System for advanced renal replacement therapy for end-stage renal disease patients; and 2) UltraPure Filters for medical, commercial, military and recreational use. We see Nephros as an attractive speculative investment in the medical device industry with a differentiated product targeting two large markets.

Additional highlights from the report are as follows:

High performance filters to drive growth in 2015

Nephros has developed a proprietary line of high performance filters, called ultrafilters, which have applications in hospitals for purification and dialysis centers for the removal of biological contaminants from water, bicarbonate concentrate and/or blood. Its filters are the only FDA-cleared water filter labeled for infection control in a hospital, making them an ideal tool to combat the spread of healthcare associated infections (HAI), which account for approximately 1.7mn infections and 99,000 deaths annually, according to the CDC. Nephros received FDA clearance for the DSU-H and SSU-H ultrafilters in October, and launched commercial efforts this January. The company has amassed an impressive group of distributors, with immediate results, as it reported record product sales in 1Q15. We expect ultrafilters to drive 2015E results, as there are over 1mn filter locations in the 6,000 US-based hospitals – representing a $400mn opportunity for Nephros.

Nephros is also commercializing its ultrafilter technology for use in dialysis centers. Its DSU-D and SSU-D ultrafilters have been cleared for use in hemodialysis by the FDA, under a CE mark in Europe, and by Health Canada. There are over 125,000 possible filter locations in 6,600 dialysis centers across the United States, representing a $45mn market opportunity. Nephros has already signed key distribution agreements in this area, and we expect see ultrafilters sold into the dialysis market to contribute noticeably to growth by 2016. Longer term, Nephros is developing market-specific ultrafilter products for use in commercial, military, and recreational activities. In March the company announced that it had licensed its military-grade line of water purifiers, the HydraGuard, to CamelBak, the global leader in hands-free hydration gear.

Powerful upside potential from on-line HDF commercialization

In addition to filters, Nephros has created a novel, on-line mid-dilution Hemodiafiltration (HDF) System for use with dialysis machines for the treatment of chronic renal failure patients. The HDF System offers substantive advantages versus hemodialysis and hemofiltration, positioning Nephros favorably as it enters the $47.5Bn market for end stage renal disease. Importantly, Nephros has the only FDA-cleared on-line HDF system, which is a key point of strategic differentiation in our view. The company has begun discussions with dialyzer industry leaders DaVita Kidney Care and the Renal Research Institute of Fresenius Medical Care to evaluate possible commercial opportunities. Combined, DaVita and Fresenius control nearly 2/3 of the US dialysis market, with over 4,300 clinics between them. Nephros is aggressively pursuing commercial partners for the HDF, and its management estimates that the opportunity is over $1Bn if its HDF system is adopted by either DaVita or Fresenius. With ongoing discussions with both of these industry behemoths, we see HDF as offering the potential for creating substantial value to Nephros.

New CEO and Chair to lead company into commercialization

On April 15, 2015, Nephros appointed Daron Evans as President and CEO, and Lawrence Centella as Chairman. Evans has been a Nephros Director since 2013 and replaces acting CEO Dr. Paul Mieyal, who will remain on the Board. Evans brings over 20 years of financial leadership and operational experience to guide Nephros through product commercialization, having most recently served as served as Managing Director of PoC Capital LLC and CFO of Nile Therapeutics until it merged with Capricor Therapeutics (CAPR) in 2013.

Initiate coverage with a price target of $1.65

Our analysis indicates a fair value estimate of $1.65 per share, implying an upside of 118.4% from the recent price of $0.76. We view Nephros as an attractive high risk / high reward investment opportunity in the medical instruments industry.

Please review important disclosures on our website at www.seethruequity.com.

About Nephros, Inc.

Nephros is a commercial stage medical device company that develops and sells high performance liquid purification filters, as well as a hemodiafiltration system for the treatment of patients with end stage kidney disease. Its filters, which it calls ultrafilters, are primarily used in dialysis centers for the removal of biological contaminants from water, bicarbonate concentrate and/or blood.

Nephros was founded in 1997 by healthcare professionals affiliated with Columbia University Medical Center/New York-Presbyterian Hospital to develop and commercialize a hemodiafiltration system, an alternative method to hemodialysis. Since its founding, the company has extended its filtration technologies to meet the demand for liquid purification in other areas, in particular water purification.

For more information about Nephros and its products, the company’s website can be found www.nephros.com.

About SeeThruEquity

SeeThruEquity is an equity research and corporate access firm focused on companies with less than $1 billion in market capitalization. The research is not paid for and is unbiased. We do not conduct any investment banking or commission based business. We are approved to contribute our research to Thomson One Analytics (First Call), Capital IQ, FactSet, Zacks, and distribute our research to our database of opt-in investors. We also contribute our estimates to Thomson Estimates, the leading estimates platform on Wall Street.

For more information visit www.seethruequity.com.

Contact:

Ajay Tandon
SeeThruEquity
info@seethruequity.com

SOURCE: SeeThruEquity

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